Structure Before You Buy: The Decision That Changes Everything
Every dollar you earn, every percentage point of appreciation you capture, and every year of ownership becomes more valuable, or less , based on a decision you make before you buy a single property: how will you own it?
For US domestic investors, the structure question is important. For international investors, it can be the difference between an extraordinary investment and a devastating estate tax bill.
This guide covers the ownership structure landscape for US real estate investors: foreign nationals, US expats, and US domestic investors, and explains exactly how America Mortgages' DSCR program interfaces with each structure.
Structure Option 1: Personal Name
How it works: The property deed reads "John Smith" or "Jane Lee." You are the legal owner.
Advantages: Simple. Cheap to set up. No ongoing entity maintenance.
US tax implications: Rental income reported on your personal US tax return (1040NR for non-residents; Schedule E for US residents).
US estate tax implications (THE CRITICAL ISSUE):
Non-US residents face US estate tax on US situs assets, including real estate, above $60,000, at rates up to 40%.
Example: A Singapore investor owns a $400,000 Nashville property in personal name. At death, the US estate tax calculation:
- US taxable estate: $400,000
- Exemption: $60,000
- Taxable amount: $340,000
- US estate tax (graduated): approximately $100,280
For US citizens: The estate tax exemption is $13.61 million (2024) — personal name is generally fine from an estate tax perspective.
DSCR loan compatibility: Full compatibility. Personal name DSCR loans are standard.
Recommended for: US citizen investors with modest portfolios. Not recommended for non-US residents due to estate tax exposure.
Structure Option 2: US LLC (Limited Liability Company)
How it works: You form a US LLC (typically Delaware or Wyoming). The LLC owns the property. You own the LLC.
Advantages:
- Asset protection: LLC debts cannot reach your personal assets; personal debts cannot reach LLC assets (if properly maintained)
- Privacy: LLC member information not publicly searchable in Wyoming (only agent); Delaware requires minimal disclosure
- Potential US estate tax planning: If the US LLC is owned by a foreign entity, the membership interest may be classified as a foreign situs asset, potentially removing US estate tax exposure on the underlying real estate
The US estate tax planning argument (foreign investors):
Foreign entity (BVI Co., Cayman Ltd., Singapore Pte Ltd.) → owns → US LLC → owns → US Real Estate
Some US international tax attorneys argue this structure converts the US situs real estate into a foreign situs membership interest — removing it from the US estate tax calculation. This position is contested and requires qualified US tax counsel to evaluate and implement.
Cost: Delaware: ~$90 state filing fee + registered agent ($100–$300/year). Wyoming: ~$100 + registered agent. Annual maintenance: minimal. Annual tax return (Form 1065 or 8832 election): $300–$800 with a CPA.
DSCR loan compatibility: Full compatibility. Single-member and multi-member LLCs are standard DSCR borrowers. Personal guarantee from member(s) typically required.
Recommended for: All international investors (non-US residents). Most sophisticated US domestic investors seeking asset protection.
Structure Option 3: Series LLC (Available in Wyoming, Texas, Delaware)
Advanced structure: A single "parent" LLC with multiple "series" within it, each holding a separate property. One registration, multiple property-level liability shields.
Advantages: Cost-effective for multi-property portfolios. One parent entity, unlimited series.
DSCR loan compatibility: Varies by lender. Some DSCR lenders accept series LLC structures; others require standalone LLCs. America Mortgages' 150+ program access identifies the programs that accommodate series LLC borrowers.
Recommended for: Experienced investors with 5+ properties seeking administrative efficiency.
Structure Option 4: US Corporation (C-Corp or S-Corp)
How it works: The property is owned by a US C-Corp or S-Corp.
Generally not recommended for residential real estate due to double taxation (C-Corp profits taxed at corporate level + dividend level) and passive activity loss limitation issues (S-Corp).
Rare appropriate use: When the property is part of an operating business (hospitality, managed property, etc.) where the corporate structure's other advantages outweigh the real estate tax disadvantages.
DSCR loan compatibility: Possible but uncommon; most DSCR lenders prefer LLC structure.
Setting Up Your US LLC: The Step-by-Step Process
For first-time international investors forming a US LLC:
Step 1: Choose the state. Delaware and Wyoming are the most popular for international investors.
- Delaware: Deep corporate law tradition, well-understood globally, favorable courts
- Wyoming: Superior privacy (no public member list), strong charging order protection, low fees
Step 2: File articles of organisation. Online with the Secretary of State. 1–5 business days. Cost: $90 (Delaware) or $100 (Wyoming).
Step 3: Appoint a registered agent. Required in all states. Cost: $100–$300/year. Many registered agent services offer packages including address service.
Step 4: Obtain an EIN (Employer Identification Number). IRS Form SS-4. Online application for foreign-owned entities: 1–3 days. This is the LLC's tax ID, required for opening a US bank account and for DSCR loan applications.
Step 5: Draft an operating agreement. Required document defining LLC governance. For single-member LLCs, a simple template works. Multi-member LLCs require a more detailed agreement.
Step 6: Open a US business bank account. Required by most DSCR lenders for loan servicing. Foreign-owned LLCs face more bank scrutiny — Relay, Mercury, or banks with international business programs are more accessible than traditional large banks.
Step 7: Title the property in the LLC name. At closing, the purchase deed reads "[LLC Name], a Delaware LLC" as grantee.
Total timeline: 2–4 weeks for LLC formation through bank account opening.
America Mortgages coordinates with qualified US attorneys for LLC formation and operating agreement drafting as part of the investor onboarding process.
DSCR Loan Mechanics for LLC-Owned Properties
When the borrower is an LLC rather than an individual:
Loan application: Made in the LLC's name, with EIN as tax ID
Personal guarantee: The managing member (you) provides a personal guarantee as a condition of most DSCR loans
LLC operating agreement: Required for submission to underwriting
Bank account: LLC business checking account required for loan disbursement and payment collection
Rental income: All rent collected by the LLC and deposited to LLC account
Rate impact: LLC ownership generally does not affect DSCR loan rate. Some minor pricing differences may apply on specific programs — America Mortgages advises on any program-specific LLC pricing implications.
The US Estate Tax Table: Why This Matters for Every Non-US Resident
| Property Value | Personal Name (Non-US Resident Estate Tax) | LLC (Potentially Eliminated) |
| $100,000 | ~$16,000 | $0 (if structured) |
| $300,000 | ~$88,000 | $0 (if structured) |
| $500,000 | ~$152,000 | $0 (if structured) |
| $1,000,000 | ~$332,000 | $0 (if structured) |
Estate tax calculations are illustrative. Actual tax depends on total US estate size, applicable treaties, and specific legal structure. Consult a qualified US international tax attorney.
The LLC formation cost ($500–$2,000 total): worth it at every property value above $100,000.
FAQ: US Real Estate Structure
Q1: Do I need to live in Delaware to form a Delaware LLC?
A: No. Delaware LLCs are the most commonly chosen by non-residents globally. You need only a registered agent with a Delaware address.
Q2: Can one person own an LLC in the US as a non-US resident?
A: Yes. Single-member foreign-owned LLCs are fully legal. The LLC files a US tax return annually (8832 election or 1065 depending on structure).
Q3: What is the annual cost of maintaining a US LLC?
A: Delaware: $300 annual franchise tax + registered agent ($100–$300) + CPA for tax return ($300–$800). Total: ~$700–$1,400/year.
Q4: Does the LLC need a US address?
A: The registered agent's address serves as the official address. You do not need a physical US office.
Q5: Can I add properties to the same LLC?
A: Yes. Multiple properties can be held in a single LLC. From an asset protection standpoint, separate LLCs per property provide stronger isolation. From an administrative standpoint, one LLC simplifies management.
Contact America Mortgages
Website: AmericaMortgages.com | GMG.asia
US: +1 830-217-6608
Singapore: +65 8430-1541
Email: [email protected]
Call: +1 (845) 583-0830
